Revealed: Top 50 GCC banks
Now Reading
Revealed: Top 50 GCC banks

Revealed: Top 50 GCC banks

Gulf Business reveals the 50 biggest banks in the GCC as ranked by total assets

Avatar

Reflecting the lagged effect of the much lower oil price in 2015, which was maintained in 2016, economic growth across the GCC region weakened last year as governments’ revenues fell.

This in turn negatively impacted the commercial and corporate sectors while consumer confidence and spending weakened. As a result, the GCC banking sector recorded lower returns in 2016, particularly due to increased provisioning and impairment charges as loan asset quality remained under pressure.

However, there was great variation, with some banks seeing declining asset bases and a number of banks still recording growth. Many better performing banks achieved good rises in net profit year-on-year.

(View the complete list of the Top 50 GCC Banks)

Other metrics were less variable. Net profit for the GCC banking sector declined by 4 per cent in 2016, following an increase of 7 per cent in 2015. In fact, it was the first fall in GCC banking net profit for many years. Some 24 of the top 50 GCC banks recorded lower profit in 2016, compared to 13 in 2015 and only six in 2014. Only five banks (17 in 2015) recorded double digit increases. Reduced profits for Gulf banks in 2016 were due to increased impairment charges on financing, tightened margins and low loan demand.

Business and retail activity has been hit by the fall in the oil price and its knock-on impact on investor and consumer sentiment. This reflects difficult trading conditions with low asset growth and increased provisioning charges.

The loan book growth was also down in 2016, reflecting the weaker economic environment. Loans for the region grew by 5 per cent against 9 per cent in 2015.

That being said, the non-oil sector in most Gulf countries has strengthened, helping to compensate for lower oil revenue. Indeed, all GCC governments are focusing on developing and strengthening their non-oil economies in order to make economies more resilient and flexible.

Most governments have continued to invest in large infrastructure projects in order to maintain activity and growth. However, there have been cutbacks as governments trim fiscal deficits in the region. On the positive side, the oil price has recovered over the past six months and economic growth will increase during 2017. The improved and more stable oil price has eased fiscal pressures on regional governments, with countercyclical spending strategies supporting non-oil sector growth.

This will provide a more stable operating environment for GCC banks in 2017.

(View the complete list of the Top 50 GCC Banks)

Looking ahead, GCC banks are mainly focusing on organic growth, and are increasing their efforts in private banking and facilities for high net worth individuals.

Consumer banking, despite having seen some pressure in terms of growth in 2016, is still offering opportunities as bankable populations in the region grow. Although the sector has experienced tightened liquidity, banks are well capitalised and have good buffers to support growth going forward and to absorb a potential rise in defaults. Balance sheet expansion is expected to be subdued in 2017, but banks should register growth in both assets and net profit, if only slightly.

Given the elevated risk environment for credit and financing due to lower economic growth, banks are more circumspect in their business activities. All of which means that most banks in the GCC are only budgeting for single digit growth in 2017.

You might also like


© 2021 MOTIVATE MEDIA GROUP. ALL RIGHTS RESERVED.

Scroll To Top